BlackRock has launched sustainable ETF range with six new funds that enhance environmental, social and governance (ESG) scores and targets 30% carbon reduction in Europe and globally.
Philipp Hildebrand, vice chairman, BlackRock said: "Europe is at the forefront of the sustainable investment movement. Across the region, sustainable investing is believed to be the future of investing and many European clients are pursuing the twin goals of addressing the world's societal and environmental needs while also generating long term risk-adjusted returns needed to fulfil their financial goals."
BlackRock predicts European ESG ETF assets to grow 20x to $250bn by 2028, up from $12bn today. This presents 60% of the $400bn in assets BlackRock believes ESG ETFs will gather globally.
The new equity iShares ESG Enhanced ETFs are designed for investors who are proactively looking to improve their portfolios ESG scors and reduce carbon and other Green House Gas (GHG) intensity, while maintaining a target tracking error to the world's most recognised benchmarks.
The six new funds track MSCI indices, which reweight securities to maximise ESG scores while remaining close to standard benchmarks. They are optimised to reduce carbon and GHG emissions intensity by 30% relative to the parent index and screen out companies with exposure to controversial and nuclear weapons, civilian firearms, tobacco, therma coal and oil sands as well as those implicated in very severe controversies and those in violation of United Nations Global Compact principles.
Stephen Cohen, head of iShares EMEA at BlackRock, said: "The way portfolios are built in Europe is undergoing an upheaval, with investors demanding more when it comes to transparency, value and choice. As many investors reflect on the ESG characteristics of their portfolios, we will continue to look for ways to make the expression of sustainability preferences easy and cost-efficient, while providing the tools that shine a light on the ESG profile of the ETFs they invest in."